Changing Demographics Offer a World of Opportunity for Enterprising Agents

Before the 21st century reaches the half-way mark, more than 50 percent of the population of the United States will be represented by a vast cultural mix of people considered to be “minorities,” according to the U.S. Census Bureau. Minorities, which the Bureau defines as everyone except non-Hispanic, single-race whites, are expected to become the majority in 2042.

Clearly, independent agents who wish to compete in this changing demographic environment would be wise to tap into cultural and ethnic markets that are perhaps different than their own. And a lot of agents are doing just that.

William Pierson, assistant vice president of agent development at the Independent Insurance Agents and Brokers of America and a member of the association’s diversity task force, related the story of an enterprising young agent who reached out to a group of Korean fish vendors in Washington, D.C., with great success.

The young man, a Caucasian, was trying to drum-up business, Pierson said, so he went to the fish market area of D.C., where the vendors are mostly of Korean descent. He approached one of the vendors, who said he didn’t have time to talk with the agent just then. If the agent wanted to talk about insurance, he would have to come back at 4 o’clock in the morning when the vendor did his bookkeeping and other management tasks.

“So this young guy got up and went down there the next day at 4 a.m.,” Pierson said. The Korean man was so impressed that he gave the young agent his business and told all his friends and peers. The young agent ended up writing the insurance for all of the Korean fish vendors.

That kind of initiative is a great way to break into a cultural group, Pierson said. “The most effective way to expand into a cultural group is through word of mouth. It’s not through advertising.”

Ron Patterson of Ron Patterson Insurance Agency in Richardson, Texas, would agree with that. One of the niches Patterson’s agency specializes in is writing insurance for churches, which he said was a gateway for him into African American and Hispanic communities.

“We write a lot of churches,” Patterson said. “That opened the door to black churches. [And] we’ve even got Spanish congregations that we insure that are part of a larger church, an Anglo church. It’s amazing how you can cross racial barriers and lines when you get involved with people that are involved with churches. It’s been a wonderful opportunity to for us.”

Brad Berrong with Ed Berrong Insurance Agency in Weatherford, Okla., also sees big potential in ethnic markets. Speaking at a presentation at the Independent Insurance Agents of Texas conference last June, Berrong said 15 percent to 20 percent of the total premium volume of his agency — which is located in Western Oklahoma — comes from the Asian Indian community. The agency writes a lot of business with Pakistani and Hispanic communities, as well.

“It’s a very big market,” Berrong said. Minority groups own large numbers “of businesses in the United States, and that’s going to expand. I think if people are missing embracing the change in ownership that’s occurring in our country, then they’re missing out on a lot of these accounts.”

Understanding the Culture

It’s an impressive effort to show up at a local fish market at 4 a.m. to write a piece of business. But initiative only goes so far. Agents who hope to the capture business of a diverse community also need to try to understand the culture of the group they aim to serve.

We are encouraging agents “to look at what they don’t know,” the IIABA’s Pierson said. “Look at your operation from the eyes of diverse people. … There are clearly large numbers out there to go after. If you want your agency to grow, you need to look at the populations that are growing.”

For instance, the Hispanic population is the fastest-growing minority group in the United States and is expected to triple during the period between 2008 and 2050, according to the Census Bureau. But Hispanics already represent around 80 percent of the population of El Paso, Texas, so it would seem that tapping into the growing amounts of business there would be a natural, whether one is of Hispanic descent or not.

But it still takes a lot of work, according to George Saenz Sr., owner and founder of Cielo Vista Insurance in El Paso. In the commercial side of his agency, which represents 70 percent of his total premium volume, Saenz works with a lot of small businesses and a lot of start-ups, which he said are plentiful in El Paso. While most of his business comes from referrals, Saenz said he does a lot of marketing by way of joining professional organizations such as chambers of commerce, both the regular chamber and the Hispanic chamber. Customers, he said, want to know you’re part of the community. For example, he said, he does a good amount of business with used car dealers, many of whom are Hispanics, so he joined an association of independent car dealers.

“You’ve got to be involved, you’ve got to be there,” he said. Potential customers want to know, “Do you know what you’re talking about? Do you belong to my organization?” Saenz said. “It’s got to be one on one.”

Anyone can come here and tap the market, he said, and while they don’t need to be Hispanic to do so, it does help to speak Spanish. While most people are bilingual, if Spanish is their first language, it’s the one they want to use when it comes to business.

“You have to know the culture,” advised Luis Rico, vice president of Desert West Insurance Agency, which is headquartered in El Paso but also has an office in San Antonio. “It’s one thing to know the product that you are selling, and it’s another thing to know who you are going to [be] selling it to.”

He said his agency, which has a specialty in trucking and transportation, does advertise that employees speak Spanish. “A lot of folks here in El Paso feel more comfortable with that. They are bilingual, but they feel more comfortable speaking with somebody in their own language.”

Sometimes, IIABA’s Pierson said, it’s just a matter of being interested. Even if an agent says to a group, “‘I don’t understand your culture, help me understand it.’ That goes a long way,” Pierson said. “You don’t know unless you ask.”

Referrals, Referrals, Referrals

When it comes to expanding an agency’s market share in a particular community, Patterson, Berrong, Saenz, Rico and Pierson all agreed: It’s all about referrals.

Rico’s transportation clients are mostly long-haul truckers, and they are “99.9 percent” Hispanic.

“They have trucking companies and they are working at it hard,” he said. When a new client comes to them, it’s almost always the case where they were referred by another client, “people that know us and know we do a good job.”

Patterson, who’s been in the insurance business for nearly 30 years, also said most of his business comes through referrals.

“When you treat people with respect and honor, they honor you with their business,” Patterson said. “They return that and they share with their friends. When they are treated well … it comes back to you tenfold.”

Pierson agreed. “Cultural groups that are outside the mainstream, that maybe don’t speak English that well, are truly going to rely on referrals of people similar to themselves,” he said. “Referral, word of mouth, is the way to do it. It’s that classic thing, if you do something good, they’ll tell people.”

Ethnic communities in many ways are closed communities, Berrong explained. “What I mean by that is they’re talking to each other more than they’re speaking to their banker. They talk to each other. [They’re saying] who can I get that will solve my problems, and hopefully that’s where a lot of our referrals come from.”

Pierson warned, however, if you do a bad job, “they will tell even more people.”

Patterson concurred. “People will go where they are invited but they return to places where they are well-treated. And the contrary is the same. If you mistreat somebody … they’re going to tell an awful lot of folks,” he said.

Higher Education

A larger percentage of foreign-born than native-born residents in the United States had a master’s degree or higher in 2007. Nationally, 11 percent of foreign-born — people from another country now living in the United States — and 10 percent of U.S.-born residents had an advanced degree.
(U.S. Census Bureau)

Languages Spoken

At least one-in-five residents of Arizona, California, New Mexico and Texas spoke Spanish at home in 2007, according to American Community Survey data released by the U.S. Census Bureau. Nationwide, an estimated 35 million, or about 12.3 percent, speak Spanish at home. About 19.7 percent of the population age 5 and older spoke a language other than English at home in 2007. That figure was 17.9 percent in 2000 and 13.8 percent in 1990. English is the only language spoken in 80.3 percent of households.
(U.S. Census Bureau)

The Largest Minority Group

By July 2007, Hispanics were the nation’s largest minority group (45.5 million or 15.1 percent of the estimated total U.S. population of 301.6 million) and the fastest growing community. Blacks (single race or multiracial) were the second largest at 40.7 million in 2007. Blacks were followed by Asians, who totaled 15.2 million; American Indians and Alaska Natives, who totaled 4.5 million; and Native Hawaiians and Other Pacific Islanders, with 1 million. The population of whites (single race and not of Hispanic origin) totaled 199.1 million.
(U.S. Census Bureau)